How Credit Cards May Be Impacted By A Return To Record High Stock Market Levels

Stocks soar and the government goes into a sequester, so what is going to happen to consumer finances and the credit card industry. The short term answer would be not much is likely to change. While the stock market is gaining traction, there is little evidence that the FOMC will be changing their outlook on the economy and growth any time soon. This means that they are not going to be altering the prime rate, which Is one of the key drivers with the rates that card companies may charge consumers (those with variable terms) and you should anticipate rates for variable finance products (credit cards, equity loans, variable rate mortgages) will remain pretty steady this year.

The major rebound in the stock market has been slow to filter through into most of the major banks that offer consumer credit cards (Citi, Bank of America, Capital One, Discover) aside from Chase most major banks are trading well off from their 2007 levels. Where the stock market has returned to pre economic crisis levels, most bank stocks are still trading at 40% of their highs from six years ago. These finance conglomerates are still stuck with large portfolios of bad financial assets and have struggled to regain the confidence in the Markets. Rising home prices and a stabilized real estate market will certainly help move things in a better direction, but in the short run, there is not a ton of optimism for this segment of the market, at least by most investors.

So from Wall Street back to Main Street, don’t expect major changes in the credit card industry. The consumer watchdogs seem fairly content with the current regulations and have other larger fish to fry (title or payday loans) and most consumers will likely see the increased offers and promotions from card issuers in their mailboxes for the near future. While zero percent offers for over 18 months with little to no fees may not be available, there are a lot of great cards with rewards, perks and new innovative promotions that are worth checking out (like the Discover IT) card. 2014 is heading in the right direction, the markets certainly a telltale sign, there is a lot of time left to improve your financial position and eliminate debts.